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Premium valuations along with expectations of year-end liquidity tapering measures as well as external shocks are the biggest hurdles to the ongoing stock market rally.

Besides, the 135 per cent rise seen in the 30-scrip S&P BSE Sensex from the lows of 2020 lockdown to its latest peak of more than 60,300 points might tempt some eager investors to cash-out by booking profits.

The near vertical climb for the last 18-months as pointed out by analysts might end up in a 5-10 per cent correction in the near term.

Historically, previous bull market rallies India be it in 1992, 1994, 1998-2000, 2003-07 were dented with a corrections of 5 per cent, 10 per cent, even 20 per cent.

On the other hand, any dips will usher-in buying opportunities but these will be pursued with less vigour due to high valuations, experts said.

"Markets are definitely in an expensive zone due to the prospects of future growth that will be ushered in via the massive stimulus packages as well as low interest rates and accelerated recovery with lesser chances of a severe third wave," said Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services.

"However, any dip or even a correction of nearly 10 per cent which is quite common in a bull run will re-energise the rally again as it will give further buying opportunities."

According to V.K. Vijayakumar, Cheif Investment Strategist at Geojit Financial Services: "The area of concern is the rich valuations which are becoming increasingly hard to justify. India's valuations are at 80 per cent premium to EM peers."

"At high valuations markets are vulnerable to sharp corrections. So investors may reduce portfolio risk by selling mid-and-small-caps which have run up without fundamental support. Presently safety is in high quality large-caps. Moving some money to fixed income also can be considered."

Even the NSE Nifty50 which nearly missed touching the 18,000 points-mark on Friday has risen by 138 per cent from the lows of March 24, 2020 to September 24, 2021.

"Nifty is now close to 18,000 and once that round number is achieved we could see a broad based correction in the markets," said Deepak Jasani, Head of Retail Research, HDFC Securities.

"The key risks faced by the equity markets globally include faster and farther interest rate rise (than currently expected) and contagion risks of negative developments in large economies."

Furthermore, Ashis Biswas, Head of Technical Research, CapitalVia Global Research said: "The market is certainly at its prime valuations and involves risk for the investors to enter at such high valuations."

"Although with the looming uncertainty in the Chinese market and positive sentiments globally we might be able to see the market momentum to continue further."

Additionally, global cues such as China's �Evergrande' situation along with US and UK's GDP data as well as Japan's MPC outcome can potentially induce external shocks to the rally.

In addition, the outcome of German elections as well as selection of a new Japan PM will be other major global events next week which will influence the rally.